Branson still wants to beat the banks with £3bn Lloyds deal
By James Taylor Thursday, 26 May 2011
Sir Richard Branson says Virgin Money is a 'serious bidder' for the 600 branches Lloyds is being forced to sell.
Branson's Virgin Money division may have failed in its bid to take control of Northern Rock pre-nationalisation, but everyone's favourite beardy entrepreneur hasn't given up his ambition of beating the big banks at their own game: he's told the FT that he's already met with Lloyds boss Antonio Horta-Osorio and offered to buy the 600 branches the latter is being forced to sell. Apparently, he's lining up a £3bn war-chest for the deal, and hopes to create a 'formidable competitor' to our incumbent high-street banks. Branson has had success before in disrupting established industries - and arguably now's as good a time as any to do it within the banking sector...
Lloyds is being forced to flog these branches by regulators in order to comply with state aid rules - in fact, the Independent Commission on Banking believes it should be forced to sell off hundreds more in an effort to boost competition in the sector. With the Government mad keen to encourage new entrants to the sector, Virgin Money (which has a well-established financial services business, but no high street presence) would fit the bill nicely - although admittedly that wasn't enough to persuade the Treasury to sell Branson Northern Rock at a fire-sale price before it was taken into state ownership.
According to the FT, Branson would be perfectly happy just to get his hands on those 600 branches, since he thinks this would be more than enough to take on the big banks and win. He's also trying to present this as the easiest solution for all concerned, telling the Pink 'Un that Virgin can make this happen 'quickly and smoothly' – while the (somewhat vague) talk of £3bn in financing also sounds like it's come straight from the horse's beard. And he's not soft: the report also suggests that he's sniffing around Northern Rock again too - the implication being that if Lloyds doesn't play its cards right, he might go elsewhere.
There are few people in business with Branson's flair for self-promotion. And it's true that Virgin is a brand that consumers trust - which would be a huge asset in a market where almost none of the incumbents can say the same. Equally, Branson has had success before in taking on an industry with established players and lots of vested interests before - Virgin Atlantic being the prime example (of course he's had lots of failures too, but we'll let that slide for the time being). So it'll be interesting to see whether his charm offensive pays off this time. If nothing else, he’s persistent.